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Exhibit 10.10
EXECUTION COPY
EMPLOYMENT AND NON-COMPETITION
AGREEMENT
THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT (this "
Agreement ") is made as of May 20, 2005, between EPIQ
Systems, Inc., a Missouri corporation (the " Company "), and
Lorenzo Mendizabal (" Executive ").
WHEREAS, the Company and Executive desire to enter into this
Agreement providing for Executive’s initial employment by the
Company on the terms and conditions provided herein.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
1.
Employment . The Company shall
employ Executive, and Executive hereby accepts employment with the
Company, upon the terms and conditions set forth in this Agreement
for the period beginning on or about September 1, 2005 but not
later than October 31, 2005, and continuing until terminated
as provided in Section 4 hereof (the " Employment Period
"). Although Executive’s principal location for
employment shall be his personal residence, Executive agrees that
he will spend a significant portion of his business time in the
Company’s New York City office and travel elsewhere as
business conditions warrant and as reasonably requested.
2.
Position and Duties .
(a)
During the Employment Period, Executive shall render
such administrative, sales, marketing and other executive and
managerial services to the Company and its Subsidiaries as the
Board of Directors of the Company (the " Board ") or the
President of the Company may from time to time direct and shall be
given the title of Senior Vice President.
(b)
Notwithstanding the foregoing Section 2(a),
until such time as Executive and the Company mutually agree that
Executive is no longer restricted under the Existing Noncompete
Agreement from engaging, in the United States of America, in either
(x) bankruptcy claims administration services or (y) class actions
claims administration services, Executive shall not render services
for the Company or any of its Subsidiaries that either the Company
or the Executive believes would violate the Existing Noncompete
Agreement (such portion of the Employment Period is referred to
herein as " Phase I "). Following the termination of
the non-compete period in the Existing Non-Compete Agreement,
Executive shall also render services for Bankruptcy Services, LLC
and Poorman Douglas, Inc. and other operations of the Company and
its Subsidiaries (such portion of the Employment Period is referred
to herein as " Phase II "). For purposes of this
Agreement, the " Existing Noncompete Agreement " means that
certain Trade Secrets, Confidential Information and Non-Competition
Agreement with Wells Fargo & Company and The Trumbull Group,
L.L.C., dated as of February 1, 2005.
(c)
Subject to the foregoing, Executive’s primary
reporting relationship during the Employment Period shall be to the
Company’s President, and Executive shall devote his best
efforts and his full business time and attention (except for
permitted vacation periods and reasonable periods of illness or
other incapacity) to the business and affairs of the Company
and
its Subsidiaries. Executive shall perform
his duties, responsibilities and functions to the Company and its
Subsidiaries hereunder to the best of his abilities in a diligent,
trustworthy, professional and efficient manner and shall comply
with the Company’s and its Subsidiaries’ policies and
procedures in all material respects.
(d)
For purposes of this Agreement, "
Subsidiaries " shall mean any corporation or other entity of
which the securities or other ownership interests having the voting
power to elect a majority of the board of directors or other
governing body are, at the time of determination, owned by the
Company, directly or through one of more Subsidiaries.
3.
Compensation and Benefits .
(a)
During Phase I of the Employment Period,
Executive’s base salary shall be not less than $250,000 per
annum, and during Phase II of the Employment Period
Executive’s base salary shall be not less than $375,000 per
annum (as in effect from time to time, the " Minimum Salary
Level " and, as adjusted from time to time, the " Base
Salary "), which salary shall be payable by the Company in
regular installments in accordance with the Company’s general
payroll practices (as such practices may be in effect from time to
time). During the Employment Period, Executive shall be
eligible to receive an annual bonus based on individual and Company
performance with "base", "goal" and "target" bonus amounts
described below. During the first calendar year of Phase I of
the Employment Period, the "base", "goal" and "target’ bonus
amounts shall be $150,000, $200,000 and $250,000, respectively, and
during Phase II of the Employment Period, the "base", "goal" and
"target’ bonus amounts shall be $100,000, $200,000 and
$250,000, respectively. For the first calendar year of the
Employment Period, Executive shall be guaranteed to receive a bonus
that is no less than $150,000, subject to Section 4
.
(b)
During Phase II of the Employment Period, the
Company shall provide Executive with an apartment in Manhattan, New
York that is similar to apartments provided by the Company to other
executives and that permit Executive to have his family with
him.
(c)
During the Employment Period Executive shall be
entitled to participate in all of the employee benefit programs of
the Company for which senior executive employees of the Company are
generally eligible, as such programs may be modified, replaced or
eliminated from time to time. Any payment which Executive is
required to make pursuant to such employee benefit programs may be
adjusted or implemented from time to time consistent with changes
affecting the participants generally in such programs.
(d)
During the Employment Period, Executive shall be
entitled to five (5) weeks of paid vacation per calendar year,
which amount shall be pro rated for any partial calendar year of
employment during the Employment Period; provided , however,
that Executive shall schedule such vacation time in a manner
consistent with the business needs of the Company and its
Subsidiaries. Executive’s unused vacation time shall
not be carried forward to any subsequent calendar year, and no
compensation shall be payable in lieu thereof.
(e)
During the Employment Period, the Company shall
reimburse Executive for all reasonable and appropriate expenses
actually incurred by Executive in the course of performing
Executive’s duties and responsibilities under this Agreement,
consistent with the
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Company’s policies governing senior
executive employees of the Company in effect from time to time with
respect to such expenses, upon presentation of expense statements,
vouchers or other supporting information as may be required under
the Company’s policies in effect from time to
time.
(f)
All amounts payable to Executive as compensation
hereunder (including Section 4 hereof) shall be subject to
all required and customary withholding by the Company.
(g)
Upon the commencement of the Employment Period,
Executive shall be granted a nonqualified stock option to purchase
One Hundred Thousand (100,000) shares of the Company’s common
stock pursuant to the Company’s 2004 Equity Incentive
Plan.
(h)
Executive shall be eligible to participate in the
Company’s Executive Automobile Allowance Plan in accordance
with the same terms and conditions as the senior executive
employees of the Company.
4.
Term .
(a)
The Employment Period shall end on the three year
anniversary of the date on which the Employment Period commenced
(the " Termination Date "); provided that the
Employment Period shall be automatically extended on the same terms
and conditions set forth herein, as modified from time to time by
the parties hereto, until terminated by the Company or Executive
upon at least six (6) months prior written notice to the other
party (notwithstanding anything to the contrary in this Agreement
in no event shall such a notice of termination by the Company be
deemed to be a termination without Cause); provided further
that, subject to the foregoing, (i) the Employment Period shall
terminate on the 90 th day after Executive gives the Company notice that he is
terminating the Employment Period for Good Reason, (ii) the
Employment Period shall terminate immediately upon
Executive’s death or Disability, and (iii) the Employment
Period may be terminated by the Company at any time for Cause (as
defined below). Except as otherwise provided herein, any
termination of the Employment Period by the Company shall be
effective as specified in a written notice from the Company to
Executive.
(b)
If the Employment Period is terminated by the
Company without Cause or by Executive for Good Reason, Executive
shall be entitled to continue to receive (A) his Base Salary then
in effect, payable in regular installments, from the date of
termination through the later of (x) the Termination Date and (y)
the date that is eighteen (18) months after the date on which the
Employment Period is terminated (the " Severance Period ")
and (B) Executive shall be entitled to receive, in accordance with
the Company’s then standard payroll practices, a pro rated
portion of any bonus Executive was eligible to receive had
Executive’s employment not been terminated.
Notwithstanding the foregoing, Executive shall not be entitled to
receive any amounts pursuant to this Section 4(b ) unless
(x) Executive has executed and delivered to the Company a customary
release in form and substance satisfactory to the Company providing
for the release of all claims (if any) Executive may have against
the Company or any of its Subsidiaries and affiliates, employees or
directors (other than claims for severance due hereunder) (the "
Release "), and (y) the Release has become fully effective
in all respects, and Executive has not breached the provisions of
the Release or breached the provisions of Sections 5
, 6 or 7 hereof. In the case of
Executive’s termination without Cause, Executive shall not
be
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entitled to any other salary, compensation or
benefits after termination of the Employment Period, except as
specifically provided for in this Section 4(b) or as
otherwise required by applicable law.
(c)
If the Employment Period is terminated at any time
for any reason other than as described in Section 4(a) or
4(b) above, Executive shall only be entitled to receive his
Base Salary then in effect through the date of termination and
shall not be entitled to any other salary, compensation or benefits
from the Company or its Subsidiaries thereafter, except as required
by applicable law.
(d)
If prior to the first anniversary of the date on
which Phase II begins, the Employment Period is terminated by the
Company for Cause or by Executive without Good Reason, then
Executive shall within five (5) business days after the date on
which the Employment Period is so terminated pay to the Company, by
cashier’s check or wire transfer of immediately available
funds to an account designated by the Company, an amount equal to
the aggregate amount of all bonuses previously paid by the Company
to Executive during the Employment Period.
(e)
Except as otherwise expressly provided herein, all
of Executive’s rights to salary, bonuses, employee benefits
and other compensation hereunder which would have accrued or become
payable after the termination or expiration of the Employment
Period shall cease upon such termination or expiration, other than
those expressly required under applicable law. The Company
may offset any amounts Executive owes it or its Subsidiaries
against any amounts it or its Subsidiaries owes Executive
hereunder.
(f)
For purposes of this Agreement, " Cause "
shall mean with respect to Executive one or more of the
following: (i) the conviction, plea of guilty or plea of nolo
contendre with respect to (x) a felony of any nature, or (y) any
crime involving fraud with respect to the Company or any of its
Subsidiaries or any of their customers, suppliers or other business
relations, (ii) repeated conduct causing the Company or any of its
Subsidiaries substantial public disgrace or disrepute or
substantial economic harm, (iii) the continued failure, as
determined in the good faith reasonable judgment of the Board, to
perform his duties under this Agreement as reasonably directed by
the Board or the President of the Company, which failure is not
cured, if curable, within thirty (30) business days after delivery
of written notice thereof to Executive, (iv) any act or omission
aiding or abetting a competitor, supplier or customer of the
Company or any of its Subsidiaries to the material disadvantage or
detriment of the Company or any of its Subsidiaries, (v) gross
negligence or willful misconduct or the commission of any other act
or omission involving dishonesty, or disloyalty or fraud with
respect to the Company or any of its Subsidiaries or (vi) any
material breach of this Agreement which, if curable, is not cured
within ten (10) business days after delivery of written notice
thereof to Executive.
(g)
For purposes of this Agreement, " Good Reason
" shall mean if Executive resigns from employment with the Company
prior to the end of the Employment Period as a result of one or
more of the following reasons: (i) the Company reduces the
amount of the Base Salary then in effect below the Minimum Salary
Level then in effect, (ii) the Company fails to pay the Base Salary
then in effect or other benefits required to be provided by the
Company to
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Executive hereunder, (iii) the Company materially
reduces the overall compensation or benefits required to be
provided by the Company to Executive hereunder, or (iv) any change
of Executive’s principal office location to a location more
distant than thirty (30) miles from Executive’s personal
residence (it being understood that, as provided in Section
1 , Executive agrees that he will be required to spend a
significant portion of his business time in the Company’s New
York City office and travel elsewhere as business conditions
warrant and as reasonably requested); provided that written
notice of Executive’s resignation for Good Reason must be
delivered to the Company within thirty (30) days after the
occurrence of any such event in order for Executive’s
resignation with Good Reason to be effective hereunder;
provided further that, in order for Executive’s
resignation for Good Reason to be effective hereunder, the Company
must not have cured such event (if curable) within twenty (20) days
after receiving written notice thereof.
(h)
For the purposes of this Agreement, "
Disability " shall mean the Executive’s inability to
perform the essential duties, responsibilities and functions of his
position with the Company and its Subsidiaries as a result of any
mental or physical impairment or incapacity even with reasonable
accommodations of such disability or incapacity provided by the
Company and its Subsidiaries or if providing such accommodations
would be unreasonable, all as determined by the Board based on
competent medical evidence in its reasonable good faith
judgment. Executive shall cooperate in all respects with the
Company if a question arises as to whether he has become
disabled.
5.
Confidential Information .
(a)
Executive acknowledges that the information,
observations and data (including trade secrets) obtained by him
while employed by the Company and its Subsidiaries concerning the
business or affairs of the Company or any of its Subsidiaries ("
Confidential Information ") are the property of the Company
and/or one or more of its Subsidiaries. Therefore, Executive
agrees that he shall not disclose to any person or entity or use
for his own purposes any Confidential Information or any
confidential or proprietary information of other persons or
entities in the possession of the
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